In a young company, you do not just have to spend a lot of time and energy; the necessary money must also be invested in it. However, not every starting entrepreneur has the financial means to pay for this investment independently. In that case, taking out a loan can offer some solutions. Just keep reading!
1. Guarantee credit
For starting entrepreneurs there is the possibility to use the guarantee credit. The option makes it possible to borrow money from the bank, even if your collateral is insufficient in the eyes of the bank. Your company must of course meet a number of conditions for this. For example, in a country you can’t have more than 250 employees and the annual turnover may not exceed fifty million dollars.
2. Current account credit
With a current account credit you can withdraw money up to a certain agreed amount, the credit limit. This allows you to absorb fluctuations in expenses and income. That is why a current account credit can be particularly useful if your company operates on a seasonal basis or if you need financing for your working capital. The credit makes it possible to deal more flexibly with the management of your liquidity flows. You only have to pay interest on the amount you debit.
3. Risk capital
In short, risk capital means that others invest money in your company. Venture capital can apply to an innovative or technological start-up, because in that case a considerable amount must be invested to develop a product, while in the short term there will be little or no turnover. Banks generally take such a risk less quickly than investors, who buy a certain share in your company. Does the startup appear successful? Then they share in the profits, but if not, they lose their investment.
4. Incentive capital
The incentive capital is a form of financing, intended among other things for start-ups, growth companies and innovative companies. On two important points, the loanable option differs from an ordinary bank loan: it is a subordinated loan that can be redeemed in the first five years. As a result, you have more space in the financial phase in the start-up phase. If your company does not succeed, you can first pay off all other creditors. Only then do you dissolve your stimulation capital. So it may be that if your company gets into a bankruptcy, you can’t pay off this loan at all. In that case the remaining amount is waived.
Leasing is also a form of financing. This concerns financial or operational lease. In the case of a financial lease, the financier provides a loan against a fixed collateral (the so-called object financing). The legal and full economic ownership (use and enjoyment, insurance, maintenance) is for the account of the lessee. In the case of operational lease, the lender buys company assets or durable consumer goods on behalf of his client. He places these goods at the disposal of the borrower (the lessee) for a pre-agreed term and for a fixed fee. In this case, the leasing company remains legally the owner of the leased goods. Commercial leasing often involves leasing.